News & Views - 02/05/98

Thursday, February 5, 1998

BOGUS BUSINESSES BUSTED

The Federal Trade Commission has filed charges against three companies for allegedly operating business opportunity scams. "This is a new twist on the old problem of business opportunity fraud," said Jodie Bernstein, Director of the FTC's Bureau of Consumer Protection. "Unscrupulous operators convince consumers with ads that say they can cash in on the well-known hassle of processing billing and insurance claims by providing billing services for doctors. The fact is that most doctors who outsource their billing don't do so with small start-up companies. And after investing thousands of dollars in 'medical billing center' software and services, many consumers don't even end up with one customer and most don't even recover their original investment."

The FTC charged the defendants with making false and misleading statements to consumers in violation of federal law, and asked federal district courts to issue orders halting the deceptive sales practices, freezing the assets of the defendants, and providing refunds to victims. Two of the companies were also charged with violating the FTC Franchise Rule, which requires the franchise or business opportunity seller to provide possible customers with a complete and accurate disclosure document containing twenty categories of information.

The defendants are&#&058;

Electronic Filing Associates, a Nevada corporation doing business in Scottsdale Arizona, Electronic Filing Academy, and their president, Edward E. Epstein, with violation of the FTC Act, which bars deceptive and misleading business practices;
National Electronic Healthcare Corporation and Electronic Healthcare Products of Reno, Nevada, and its officers; Steve Shelton; Lynne Shelton; Gary White and Leslie White with violations of the FTC Act and the Franchise Rule; and
National Consulting Group, Inc. and Brian G. Fisher of Arlington Heights, Illinois, with FTC Act and Franchise Rule violations.

In a related case, Electronic Healthcare Products has agreed to settle charges filed by the Florida Department of Agriculture and Consumer Services that it provided incomplete disclosure documents to consumers, in violation of Florida law. The Department has also filed charges against Professional Claims of South Carolina, and has initiated an investigation of Mars Medical of Arizona.

For more information about the FTC case, check out the FTC press release.

Don't get taken by business opportunity scams. Before you purchase a business opportunity or franchise, read NFIC's tips on telemarketing or online business opportunity schemes. You should also read the FTC's brochures on the topic: Business Opportunities: Avoiding Vending Machine & Display Rack Scams; Consumer Guide to Buying a Franchise; Franchise & Business Opportunities; and, Medical Billing Business Opportunity Schemes.

If you have questions or would like to report an incident, call NCL's National Fraud Information Center at 1-800-876-7060, or use one of our online forms.

NOTE: The Commission files a complaint when it has "reason to believe" that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendant has actually violated the law. The case will be decided by the court.

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